The Indian rupee weakened on Friday after trading in a tight band for much of the session as month-end US dollar demand from oil importers offset the large dollar inflows seen towards Yes Bank's share sale.

India's Yes Bank Ltd has raised $500 million in a share sale to institutional investors, two bankers involved in the deal said, the first of a raft of equity deals expected after a landslide election victory for new Prime Minister Narendra Modi.

Traders will now focus on the central bank's monetary policy review next week which will be key in helping get some clarity on the central bank's thoughts on the outlook for inflation and rates.

Earlier on Friday, RBI chief Raghuram Rajan said he expected to join hands with the country's new government to bring down high inflation.

He also said the new government's plan to curb food inflation seems sensible and that he expected the public's inflation expectations to fall in the future.

"There was very good buying seen from state-run banks, largely on behalf of the oil companies today. RBI policy is now the key focus," said Hari Chandramgethen, head of foreign exchange trading at South Indian Bank.

The partially convertible rupee closed at 59.10/11 per dollar compared to 59.03/04 on Thursday. On the week, the rupee fell 1 percent in its biggest weekly fall since the week to Jan. 24. On the month however, the rupee gained 2 percent.

Data showed foreign exchange reserves in the week to May 23 fell $2.27 billion, the biggest weekly fall since the week to Jan. 3.

Traders will continue to monitor share moves and any announcements from the new government for direction.

Indian stocks fell to mark their first weekly fall in four, as blue-chips such as State Bank of India declined after foreign investors sold shares for a fourth consecutive session, while caution was also seen ahead of GDP data and the central bank's policy review.

In the offshore non-deliverable forwards, the one-month contract was at 59.31 while the three-month was at 59.89.